Tuesday, February 09, 2010

Caswool Cotco (Yanceyville, North Carolina)

Yanceyville, NC: Caswool Cotco

Yanceyville, the county seat of Caswell County, is located in the North Carolina Piedmont region near the Research Triangle and the Triad cities of Greensboro, High Point, and Winston-Salem. The county has a high proportion of elderly and other Medicaid and food stamp recipients. Flue-cured tobacco production accounts for approximately 75 percent of the value of agricultural production in the county. Consequently, changes in the Federal tobacco program in the mid-1980s, such as the change in the Federal quota system, changed the economic base of the community. Before 1986, flue-cured tobacco farmers holding Federal quotas could lease their quotas or portions of their quotas by the pound to other growers. Many operators have stopped farning tobbacco because they could not afford to buy the quotas they had previously leased. Elimination of the lease and transfer system in 1986 consolidated tobacco production from 550 producers in 1986 to about 300 producers in 1990.

Caswell County's small manufacturing base shrank by almost 350 jobs when Hanover Mills closed in 1986. This caused several local citizens, led by the county extension agent, to develop the idea of a worker-owned business that would utilize local resources. The basic economic development strategy was to establish an umbrella organization, Caswool Cotco, which would serve as an incubator for worker-owned enterprises in the community. C.C. Knitting was the only organization established by Caswool Cotco. Four knitting machines for making wool sweaters were purchased with money donated by local people. The knitting cooperative folded in early 1991; not long after, another textile firm left the county and went to West Virginia.

Caswool Cotco (an unsuccessful case) can be said to have suffered from near absence of leadership.

Caswool Cotco was led by women, although the county agent (a man) was instrumental in initiating the cooperative. Minorities did not hold leadership positions in any project, although there are significant African American populations in Rome, Mars Hill, and Yanceyville.

Local government in Caswell County was concerned with industrial recruitment and did nothing to encourage or discourage Caswool Cotco, although the county extension director was instrumental in the early development of the cooperative.

Caswool Cotco developed a worker-owned cooperative, C. C. Knitting. Caswool Cotco was a nonprofit organization intended to serve as an incubator for a large number of "for-profit" organizations in the community. This structure enabled C. C. Knitting, through Caswool Cotco, to obtain funding from several foundations that would provide money only to nonprofit organizations. However, the organization faced numerous problems because of its status as a worker-owned cooperative. One of the major problems was the lack of management skill, and even the lack of a desire to manage, among the worker-owners. Another problem was a lack of knowledge of marketing. They advertised in crafts catalogs, but stopped doing so when cash-flow became a problem.

Caswool Cotco relied on some local funds, and several individuals donated money for four knitting machines. Moreover, the group sold $25 memberships to about 30-40 people. Surprisingly, access to capital was not a big problem because the group was successful at grant writing. The primary sources of funding were foundations and churches. Rather, the problem was that grant money tended to be used for operating expenses, instead of investments leading to a self-sustaining business. As with the Northern Vermont cooperative, the problems were organizational, not financial.

Caswool Cotco was dependent on several external groups. The most important was a development organization partially funded by the Presbyterian Church. The national Presbyterian Church had been very active in international development, but it had not done much in the area of domestic rural development. In the mid-1980s, the church decided that it would identify some local groups needing assistance. The church established an organization whose major activity was to help locally owned businesses. The head of the development organization came to Yanceyville to work with the local county extension director. Although the self-development project successfully used these external ties to obtain grants, it was less successful in obtaining assistance in the management of the business. The project especially needed help marketing, but did not seek any external assistance in this area. Thus, the organizational problems experienced by Caswool Cotco can be viewed from two perspectives:

1. Having been workers in a textile factory, the members had much experience in production but none in management or marketing. The participants' lack of experience in management suggests that perhaps the cooperative form of organization, which was suggested by the Presbyterian development organization, was not appropriate; at least if not accompanied by an intensive cooperative and management training program.

2. The technical assistance that Caswool Cotco received was inadequate. Generalist technical assistance organizations need to have the capacity to know when specialists should be called in. Apparently, neither the extension service nor the Presbyterian development organization recognized the need for outside marketing experts to work with the members to devise a feasible marketing strategy, or for management experts to assist in determining the appropriate management and legal structures for the firm.

In the case of Caswool Cotco, the organizational structure chosen was not compatible with the experiences of the owner-workers. Technical assistance should have highlighted that problem.
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